*JOHN COLLIER -Is a thirty year veteran of the healthcare industry, author, provider advocate, and founder and CEO of Innovative Managed Care Solutions (IMCS)
This blog series is entitled, “From Whereas to Signature: The Provider’s Guide to Managed Care Contracting”. Everyone understands what a Whereas is…right? It is the Whereas clauses (those first few parts of any agreement) that layout the reason for contracting. However, our first comment is on the part of the contract that comes before even the first Whereas. It is the definition of who are the parties to the agreement and the effective date of the agreement. The very first paragraph will often include something like the following:
This Agreement (“Agreement”) entered into (or alternatively effective) this first day of January 20?? Between Managed Care Organization (“MCO”) and Very Best Provider (“Provider”)…
It is important to state the official name of your organization, including the “Inc.”, “LLC”, etc. and any d/b/a you may be officially using. You will also want to ensure that you include all of the entities you are contracting for, and only those entities you are contracting for. If you have a parent company and several entities under it, do not contract for the parent if you do not intend to have all of the entities under the same contract. For example, a hospital may have a parent company with several organizations under it such as ambulatory surgery centers, outpatient diagnostic center or lab, long term care facilities etc. Only include the entities you intend to have under this agreement. And there are good reasons not to contract the parent entity. You may want to be able to terminate a certain part of the business without terminating the whole agreement.
Additionally, be sure that the fee schedules relate to the entity(ies) being contracted are included. For example, you would need to have a fee schedule for radiology CPT codes if you are including an outpatient diagnostic center, or you would not have DRG based reimbursement unless a hospital is involved. Or if you are a multispecialty physician practice, be sure all CPT codes used by the different specialists are included.
There are a couple of common substitutions for the date of the agreement. It can be stated specifically, as outlined above, in this case, the agreement starts on the date stated. That is when all of the terms must be followed. It is the date when you as a provider will be held accountable, and when the provider can hold the payer accountable, for all of the terms in the agreement. If you are a provider such as a hospital, or physical therapy where services may be provided over time, there may be a question as to when the terms begin. Should they begin on the date of admission, date of discharge, or date of last service? Are the procedures to be split for services rendered before the effective date and those occurring after? If you are in question, you should specify within the agreement when you and the payer, are subject to the terms of the agreement.
Another option you may see in an agreement is language something like, “The Agreement is effective on the date last signed on the signature page of this Agreement.” Or even “The Agreement is effective on the date determined by Payer as stated on the signature page (or elsewhere) of this Agreement. In this case it is important to communicate with the payer so all parties know when they are obligated under the terms of the agreement.
In other situations, the effective date may be elsewhere in the agreement such as in a section labeled “Term and Termination” or something similar.
If you are not able to, or do not find it important to, negotiate the termination terms, it is important to know when an agreement starts so you know your obligations related to how you may terminate the agreement. There will be more on this later, but often the clause for termination without cause is tied to the anniversary of the agreement.
As always, if you have any questions about this post, or any questions in general regarding managed care contracting, we would like to hear from you. Contact me–John Collier at: jcollier@imcsllc.net.
